The Hindu Business Line : Smooth credit flow to small sector in offing: Sikdar

THE Union Ministry for Small-Scale Industries will soon send directives to banks and financial institutions in an effort to facilitate smooth credit flow to units of the sector.

This was announced by Mr Tapan Sikdar, Minister of State for Small-Scale Industry and development of north-eastern region. He was addressing members of the Bengal National Chamber of Commerce and Industry.

According to him, there are several complaints from small-scale units against banks and financial institutions for delays in credit sanction. At times, he added, the institutions are said to extend inadequate credit and also ask for huge collaterals.

"The Ministry has been noticing these complaints for some time. We have decided to send strong directives to the banks and financial institutions. A specific period will also be fixed by which the banks will have to sanction the loans," he said.

He said that, in an effort to mitigate the problem of collaterals, the Union Government was implementing the credit guarantee scheme for loans between Rs 5 lakh and Rs 25 lakh.

The Minister said that 34 lakh small-scale units in India contributed 39 per cent of total industrial production, 35 per cent of India's total exports, and employed more than 200 lakh people.

The sector has been registering a higher growth than the industrial sector as a whole. The Tenth Plan has targeted a 12 per cent per annum growth for the small-scale sector against eight per cent for the overall economy.

"Taking into consideration the higher potential for growth in the SSI sector, it is the endeavour of the Government to strengthen the sector to enable it to remain competitive in a market-led economy," he said.

Mr Santosh Ranjan Saha, president of the chamber, urged the Union Minister to increase the excise exemption benefit for small-scale units from Rs 1 crore to Rs 3 crore.

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